Increased Risk Aversion Ahead of US Fed Meeting, SHFE Zinc Declines [SMM Zinc Morning Comment]

SMM September 18:

Overnight, LME zinc opened at $2,983.5/mt. It fluctuated around the daily average line in early trading, then rose and touched a high of $2,998.5/mt during European trading hours. Subsequently, bears increased their positions, and LME zinc fluctuated downward, hitting a low of $2,937/mt at the end of the session. It finally closed up at $2,943/mt, down $41.5/mt or 1.39%. Trading volume increased to 14,598 lots, and open interest rose by 229 lots to 216,000 lots. Overnight, LME zinc recorded a large bearish candlestick. The US Fed announced a 25-basis-point interest rate cut, which was largely in line with expectations. However, funds showed some risk-off sentiment ahead of the meeting. LME zinc inventory remained relatively tight, providing some support. LME zinc is expected to be in the doldrums today.

Overnight, the most-traded SHFE zinc 2511 contract opened at 22,215 yuan/mt. In early trading, bears reduced their positions, and SHFE zinc plunged to a low of 22,095 yuan/mt. It then fluctuated around 22,138 yuan/mt and finally closed down at 22,120 yuan/mt, down 165 yuan/mt or 0.74%. Trading volume decreased to 43,725 lots, and open interest increased by 4,580 lots to 98,723 lots. Overnight, SHFE zinc recorded a large bearish candlestick. On the macro front, the US Fed cut interest rates as expected. Domestic inventory continued to build up. Divergent trends between SHFE and LME drew market attention to the opening of the zinc ingot export window. The domestic surplus expectation persists. SHFE zinc is expected to fluctuate today.